US Dollar Index comes under pressure below 97.30
|- DXY remains on the defensive following US data releases.
- US, China to sign the ‘Phase 1’ trade deal later.
- US Empire State index surprised to the upside.
The greenback, when measured by the US Dollar Index (DXY), remains under pressure in the middle of the week around the 97.30/20 band.
US Dollar Index offered ahead of US-China deal
After two consecutive daily advances and persistent failed attempts to break above the 97.60 region – coincident with the 55-day SMA and YTD highs – the index has now come under selling pressure and is flirting with the 21-day SMA near 97.20, or weekly lows.
The dollar met extra selling bias after US headline Producer Prices rose just 0.1% on a monthly basis during December, missing initial estimates. The same direction followed the Core print, rising 0.1% from a month earlier. On the brighter side, the regional manufacturing gauged tracked by the Empire State index improved to 4.80 for the current month, also beating consensus.
Later in the session, the US and China will finally sign the ‘Phase 1’ trade deal. In the docket, the EIA will publish its weekly report on US crude oil supplies and the Fed will release the Beige Book. In addition, Philly Fed P.Harker (voter, dovish) and Atlanta Fed R.Kaplan (voter, dovish) are due to speak.
What to look for around USD
The upside momentum in DXY has so far met solid resistance in the area of yearly highs around 97.60 amidst disappointing CPI figures and rising optimism ahead of the signing of the ‘Phase 1’ deal with China and with optimism ahead of the negotiations regarding the 'Phase 2' deal already runnning high. So far, the recovery in the greenback continues to target the key 200-day SMA in the 97.70 region. Above this level, DXY should regain the constructive view, always underpinned by the current ‘wait-and-see’ stance from the Fed (confirmed once again at the latest FOMC minutes) vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the index is losing 0.14% at 97.25 and faces the next support at 97.20 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop). On the upside, a breakout of 97.58 (2020 high Jan.9) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.